Letter to NYC Comptroller Stringer Calling for Divestment from Illegal Payday Lenders

Letter to NYC Comptroller Stringer Calling for Divestment from Illegal Payday Lenders

The Honorable Scott M. Stringer Comptroller, Nyc One Centre Street Nyc, NY 10007

Dear Comptroller Stringer:

The organizations that are undersigned one to instantly and permanently divest ny City’s retirement funds from payday lending businesses – whose loans are categorically unlawful in ny. City pension funds invested a lot more than $20 million in payday financing and high-cost installment financing organizations in 2016. Furthermore, City pension funds spent almost $160 million in Lone Star Fund VIII, a personal equity investment that has DFC worldwide, Inc.,i which, in change, owns several payday loan providers, including cash Mart plus the Check Cashing Store.

Spending general public retirement funds in disreputable payday financing organizations raises a primary conflict for the City. Not just do these businesses make triple-digit interest loans which can be unlawful in nyc, but the majority of those were the main topic of enforcement actions for flagrant violations associated with the law; mistreated clients; and encountered allegations of misleading and defrauding investors – including public retirement funds – in states where they’ve been allowed to use.

We think these opportunities pose reputational, appropriate, regulatory and financial dangers, and therefore you have got an ethical and obligation that is fiduciary divest.

Nyc is among the 15 states, plus D.C., where state that is strong rules and enforcement efficiently ban payday lending. Brand brand brand brand New York’s usury regulations are on the list of strongest when you look at the country, capping interest levels at 25% APR. Because of our ban, New Yorkers save about $790 million each Virginia title loans year in feesix that payday loan providers and their ilk would otherwise siphon—an estimate that will not also add bank overdraft charges and other fallout that is economic pay day loans.

In states where in actuality the payday financing industry is allowed to use, individuals struggling to obtain from paycheck to paycheck are methodically targeted for high-cost loans they are unable to manage. Payday loan providers charge extortionate charges and interest that is shockingly high – typically between 300% and 400% APR. The payday financing company model is centered on loan-flipping, as borrowers typically must refinance or move over their loans – usually multiple times – ensnaring them in a long-lasting period of financial obligation. Analysis has shown that communities of color are disproportionately targeted for those debt-trap loans.x

Inspite of the clear great things about banning payday loan providers as well as other fringe financial services organizations have actually for many years forced legislation in Albany that could legalize high-cost predatory lending in nyc. Those efforts have already been beaten compliment of advocacy that is tireless a statewide coalition of civil legal rights, faith-based, work and community teams.

In 2010, lawmakers once again reaffirmed New York’s longstanding dedication to maintaining pay day loans away from our state by rejecting a few billsxi – supported by effective passions like brand brand New York’s check cashing industry and a California-based “fintech” corporation – that will have inflated brand brand New York’s usury rules and started the floodgates to predatory financing.

Meanwhile, at the time of financial 12 months 2016, the five new york retirement funds purchased at the very least six regarding the country’s largest payday and installment that is high-cost – Cash America Global, Inc., Enova Overseas, Inc., EZCORP, Inc., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. – and had been spent greatly in Lone celebrity Fund VIII, a personal equity investment that has a few notorious predatory financing organizations, such as the payday financing giant, DFC worldwide.

These opportunities fly when confronted with brand brand New York’s groundbreaking and effective actions to help keep payday financing out of our state. New York’s enforcement agencies, as an example, have actually cracked straight straight down on unlawful payday lending, issuing warnings to loan companies it was unlawful to get on pay day loans in Nyc; directing payday lenders to cease making unlawful pay day loans to Ny State residents; and calling on banking institutions and their re re payments processors to cease enabling payday loan providers to gain access to New Yorkers’ bank reports. Ny has additionally acquired contract from the credit that is national to cease reporting unlawful payday advances on New Yorkers’ credit file.

Ny has made strides that are important financial equality and possibility recently. This past year, for instance, the worker-led “Fight for $15” motion won a landmark enhance to your state’s wage that is minimum. And al though we now have a great deal more work ahead, bankrolling a business that methodically exploits working people, retirees, among others struggling to obtain by and strips wide range from low-income communities and communities of color threatens not just to undercut those gains – it really is an affront to nyc values.

Just last year, nj-new jersey, that also efficiently bans payday lending, offered its pension investment assets in an exclusive equity fund that held Ace Cash Express, another of this nation’s biggest payday lenders.xii Commenting from the state’s divestment with this lending that is payday, the president for the nj-new jersey State Investment Council reported, “The bright line is what’s legal to accomplish and what’s perhaps maybe perhaps not appropriate to complete when you look at the state of New Jersey.”xiii The New York City pension funds should follow this same bright line and fully and permanently divest from payday lending companies at a minimum.

Please contact Andy Morrison at brand New Economy venture with concerns: 212-680-5100 x210.

Brooklyn-Wide Interagency Council on Aging BWICA that is( academic Fund, Inc. Dēmos Fordham Law class Feerick Center for personal Justice trusted old fashioned Lower East Side (GOLES) Housing Court Answers, Inc. Housing and Family Services of better ny, Inc. Los Angeles Fuerza Unida, Inc. LatinoJustice PRLDEF Lower East Side People’s FCU Mobilization for Justice, Inc. (previously MFY Services that is legal Center for Law and Economic Justice New Economy Project New Yorkers for Responsible Lending ny Legal Assistance Group NY StateWide Senior Action Council, Inc. NYU Law Students for Economic Justice The performing World

Groups delivered a comparable page to NYS Comptroller Thomas P. DiNapoli regarding ny State retirement funds.